Choose your right home loan and broker
Posted: May 06, 2014
What is a mortgage broker?
A mortgage broker is the person who acts as an intermediary by broking mortgage loans on behalf of individuals or businesses.
Traditionally, lending institutions, banks have sold their own products, but as the markets for mortgages have become more competitive, the role of the mortgage broker has increased substantially. The etiology for "broker" comes from a French word which means "small trader".
Why do you need a broker for simplifying your home loans?
Mortgage broker provides to an individual or a business a bank or a direct lender in accordance to that individual or business’s requirements for a specific loan. Therefore, choosing your broker when it comes to a home loan is very important as it can raise a lot of questions: will be the broker able to satisfy your requirements and act in your benefit? Simply Home Loans from Brisbane might be the answer to your questions, for example!
Choosing the right broker.
Choosing the right mortgage broker is a big decision. Make sure the broker you choose is licensed. All mortgage broker in Brisbane or Australia for that fact need to be licensed by ASIC. Ask him for a copy of his insurance, credit license and professional body he is a member of. There are only two professional organisations in the finance industry, the MFAA and the FBAA. Experience plays a large role in determining your broker, unfortunately a broker that has only been in the industry for a short while is not going to have the experience of a mortgage broker that has been in the industry for years. Make sure the broker you choose is local, choosing a mortgage broker from the Gold Coast is going to be difficult especially if you live in Brisbane and want him to explain some issue you may have face to face.
Mortgage broker vs. loan officer- differences
A mortgage broker is a person who works as an intermediary between the buyer and lender while the loan officers works directly for the lender and in most states the mortgage broker has to be licensed.
Usually, a mortgage broker is registered with the state, being punishable by revocation or prison for fraud of the life of a loan. In contradictions to, the loan officer works under the umbrella license of their current institution, a bank or direct lender.
Another demand for a mortgage broker is to be licensed through the Nationwide Mortgage Licensing System and Registry, whilst the officer loan has to be registered with the Nationwide Mortgage Licensing System and Registry, but not licensed.
Basically, a mortgage broker will be able to make more money per loan compared to an officer loan, but the officer loan can utilize the referral network available from the lending institution and this way to sell more loans.
Mortgage Fraud and predatory mortgage lending
Mortgage fraud is when one or more individuals defraud a financial institution by submitting false information willfully.
Predatory mortgage lending refers to a dishonest financial institution willfully misleads / deceives by the consumer.
Due to some disputes different voices have raised the question: Brokers- Friends of Foes? Knowing what you looking for, collaborating with reliable brokers (as an example is the Simplify Home Loan from Brisbane) will definitely decrease the chances to find yourself in an inconvenient situation!
Choosing the right loan
Making a home loan decision is a big decision. Mortgage brokers can help with this step as they deal with home loans all day every day.
P&I LOANS ( Principal and Interest)
Most people take out a principal and interest home loan, where you make regular payments against the principal (Loan) as well as paying interest. This sort of loan is the simplest way of paying off your home loan because regular repayments will insure you will pay off the principal.
Interest Only Loans
Interest-only loans are an option if you can't make higher repayments when you first get the loan or if you have purchased an investment property and need the loan balance to remain high to extract the maximum tax rebate. IO loans take longer to pay off the loan, because you still have to pay off the principal after the interest-only period. You will also pay more interest overall.Offset accounts
This is an account linked to your home loan. Any money you have in the account reduces the amount of interest you pay on your loan. For example, if you have a home loan of $100,000 and savings of $20,000 in your offset account, you pay interest on only $80,000.Redraw facility
A redraw facility is often available for no extra cost. This allows you to pay extra money into your loan that you can take out (or redraw) later if you need it. The extra money is offset against your loan to reduce the interest you pay. This saves you money in the same way as a line of credit loan or an offset account, but without the higher interest rate or the risk that the loan balance won't reduce.
In some cases, a credit provider can change its mind about releasing the redraw funds. Ask what conditions apply to your loan before you select this option.
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